As many will know, I served on the Treasury's interim General Anti-Abuse Rule committee, despite which I never stopped criticising the legislation it was implementing or the logic behind it. I continued to promote my own version of this - the General Anti-Tax Avoidance Principle Bill that was presented to parliament by Michael Meacher a year ago.
One of the key complaints I made was that the advisory panel that the General Anti-Abuse Rule required would do things. First, because it was required that they be recruited from outside HM Revenue & Customs, and be unpaid, it was inevitable that they would come from the upper echelons of the tax avoidance industry. Secondly, I suggested this would be a bar to HMRC ever being able to use the legislation because, in effect (but not in law) they had to agree unanimously that a taxpayer's actions were abusive before HMRC could proceed.
All my fears have been proved true. Richard Brooks of Private Eye attended a tax 'planning' seminar by one of the new General Anti-Abuse Rule advisory panel a few weeks ago. The person in question was David Heaton, a Baker Tilly specialist employment taxes partner. And guess what? As the BBC have reported he was advising on how to use what HMRC consider abusive tax planning schemes.
Heaton has now resigned from the GAAR panel but the damage has been done, and my concerns, long made, have been proven correct. There is no way that such a panel can be relied upon to enforce the law against tax abuse when the abuse in question in this case comes from one of them, but too often will come from people they work in close association with.
The General Anti-Abuse Rule has been utterly discredited before it has ever got going. The time for Meacher's Bill has arrived, rather earlier than I thought. Full marks to Richard Brooks. And watch Panorama on Monday.
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Only in Britain – members of the tax avoidance industry telling the tax authority and judges what is legal or otherwise! And this went through Parliament without a fuss by the opposition party?
In fairness Labour did oppose this and insisted it was discussed by the whole house house, not a committee
They last the vote
There’s quite a lot of hypocrisy here. Firstly, it’s a bit rich of the BBC to start criticising others re legitimate tax avoidance (which is perfectly lawful of course) after many of their staff have been found to be operating via personal service companies and entering into tax efficient film investment schemes and the like (all perfectly lawful also).
I was actually at this conference and David’s talk was indeed an attempt to lighten up the rather dull topic of NIC planning and that is the context of what he said re “grubby mitts” etc. That aside, who on earth is there who has not spoken about the Chancellor or HMRC in such terms when discussing tax mitigation planning with clients or potential clients or anyone else for that matter? (It’s not as if he got George Osborne’s name wrong or anything.) I’m sure HMRC and the Chancellor say worse things about people like Mr Heaton (and his clients), who let’s face it are the ones who pay HMRC’s and the Chancellor’s salary and generous pensions (not to mention expenses).
It is a prerequisite of these conferences that you are an interesting, lively talker or you will not be invited back as there are feedback forms that people will fill in criticizing boring, uninteresting, unentertaining speakers.
Also, his talk was given before he was appointed to the GAAR panel and before the GAAR became law, and so Panorama presumably just “got lucky” with him coincidentally being appointed afterwards, as otherwise this film would not have seen the light of day (it makes you wonder how many more of these relatively boring tax planning conferences they attend incognito) and also the planning he was describing would almost certainly have worked at the time of his talk (and arguably may still do so). There were many other tax planning conferences I attended before the GAAR became law where people were being told to act quickly before Royal Assent of FA 2013 and there is nothing wrong with that.
Finally, I am all for eliminating any bias in any judicial or quasi judicial entity and the logical conclusion of your comments is that it is as inappropriate for someone such as yourself to be involved in the GAAR as it is for a peddler of highly abusive and very aggressive tax avoidance schemes which Mr Heaton is certainly not. Everything about the GAAR is already stacked heavily in HMRC’s favour, with most tax advisers considering it to be a packed jury in HMRC’s favour and it is a pity that someone of Mr Heaton’s eminence and intelligence has fallen victim to this seemingly indiscriminate anti-tax avoidance witch hunt (although I’m sure he will do OK out of it in the long run by gaining some more clients from the publicity).
Respectfully, you do a great deal to prove my case
Your selective evidence is quite extraordinary
And for the record I am not saying I should be on the panel. I am saying there should be no panel
I am also saying we need a proper principle. We are a very long way from it
Err, isn’t the point of it that it’s stacked in the HMRC’s favour? That’s quite simply its entire purpose – nudging the playing field a bit closer to level. I’m sure Richard would argue that it doesn’t go anywhere near far enough and I’d agree. It’s still radically lopsided in favour of the avoiders. The bar for a scheme being ‘abusive’ is still far too high.
We can probably read too much into the rhetoric of ‘grubby mitts’, etc., that’s true, but the basic points he was making are bad enough. Even without the colourful language it’d be objectionable. That it predates his appointment doesn’t seem to be relevant. Why was he appointed? Why put a fox in charge of the chicken coop? – that’s the question.
The fact it’s all legal (though the HMRC seem to disagree with that) is utterly meaningless. We’re debating the laws that discern between legality and illegality here. Just because something’s legal doesn’t mean that it should be.
You seem to personally dislike the whole tax justice malarkey. Well, tough luck. You’re on the wrong side of history.
Most of the comments above are straight out of a Monty Python sketch, so do not merit a response, but to answer the above main points:
1) To say that a quasi judicial entity such as the GAAR panel should be in anyone’s favour, particularly in HMRC’s favour, shows that you do not understand what the GAAR is all about and how the rule of law is supposed to operate in this (or any other) country.
2) My comments above about BBC etc. hypocrisy were obviously selective in that context.
You may recall I sat on the interim GAAR panel, appointed by George Osborne I gather
And it also shows how little you do, or pretend to, understand the political reality of the UK
While I suspect the ‘discrediting’ of the GAAR has been made public by Richard Brooks sooner than many of those who aimed to profit from it might like, Richard, we have to accept that the policy and its implementation have delivered exactly what its supporters in the government, Treasury and, more than likely, parts of HMRC, wanted. It enabled the government to talk tough about avoidance, and demonstrate action (a rule and a process), while actually doing zilch of any consequence.
Looking back over the last few years – thanks largely to my engagement in such issues through your blog – what we see is a consistent strategy on avoidance and evasion pursued by this government. Talk tough – which they can rely on the Tory press to report enthusiastically and widely – maintain that “message” over a period of time via statements from an array of ministers, spokespersons and briefings, so that the (supposed) action registers with the public, then ensure that nothing of consequence happens.
Meanwhile, under cover of promoting economic growth and the recovery, develop and implement another stream of policies that actually create many more opportunities for avoidance and tax competition (with the UK as a leading player).
I know from talking to friends and colleagues that this has been an extremely effective strategy – almost everyone I speak to actually believes the Tories have been tough on tax abuse. No doubt the people who devised this approach – much of it while the Tories were in opposition, I’m sure, are being, or will be, suitably rewarded.
Alongside Cameron’s claims that tax havens no longer exist this week the truth of what you say is very clear
People tend to believe the Tories because the official opposition is nowhere to be found on the subject! At least Cameron and Osorne talk the talk; Miliband and Balls say nothin, which is actually worse given that Labour (of which Miliband and Balls were key players) laid the foundation for much of what this govt is doing on tax.
I feel a Venn diagram coming on
The problem is that the opposition are responsible for many of the rules which people dislike ie substantial shareholdings exemption and dividend exemption. How can they critiscise the govt when they were the ones who introduced them?
Haven’t you noticed that’s a point I am making today?
In my view he should be in prison for corruption,
Careful tiger. If you say that in your view he should be in prison for corruption then you are stating an opinion that a solicitor is criminally corrupt. Ask Sally Bercow how that plays out.
This does make a mockery of the GAAR panel.
David Heaton is NOT an exception, a bad apple in an otherwise a virtuous bunch. I would be surprised if most if not all of the members currently on the panel weren’t of the same ilk, They too will fail to see the big picture.
The State adopts a progressive approach and offers a relief to businesses for social policy reasons. The advisers to the multinationals and larger indigenous businesses immediately go to work to abuse the relief.
In effect, other honest hardworking taxpayers end up being mugged.
They will either have to make up from their taxes, the shortfall created by the implementation of the tax avoidance scheme, or forgo public services.
As for David Heaton personally – one word applies, hubris; now what did the ancient Greeks say…….